2 ASX Stocks Under Investor’s Radar – QPM, ELE

Queensland Pacific Metals Limited (ASX: QPM)

QPM is a battery metal exploration stock. It focused on developing the Townsville Energy Chemicals Hub (TECH) project, located in Townsville, Northern Australia. The plant produces nickel-cobalt mixed hydroxide precipitate (MHP), aluminum hydroxide, high purity haematite, and magnesium oxide. QPM was listed in ASX on March 14, 2008.

Financial and Operational Updates: On March 1, 2022, QPM had signed an ore supply agreement with Societe Le Nickel to supply ~1 million wmt per annum. QPM is yet to reach the commercialization phase of its TECH project.  It had incurred sizeable expenses in project expenses towards Townsville Energy Chemicals Hub and posted a net loss of $16.32 million in H1FY22 as compared to a net loss of $1.38 million in H1FY21. It had received an investment of US$15 million from LG Energy Solutions and POSCO GEM following which the company has allotted shares. In December 2021, QPM received finance support from Export Finance Australia to secure up to $250 million. QPM was added to the “All Ordinaries Index”, effective from March 21, 2022.

Technical Analysis: On the daily chart, QPM price witnessed a breakout of a downward sloping trendline at AUD 0.142 level (on March 18, 2022). Since the breakout, prices are sustaining above the falling trendline, which indicates bulls are in action. Moreover, the prices are trading above the trend-following indicator 21-period SMA, which may act as a support level. Further, the momentum oscillator RSI (14-period) is trading at ~53.418 level, indicating positive momentum. An important resistance level for the stock, is placed at AUD 0.180 while the key support level is placed at AUD 0.135.

Given the recent investment by LG Energy Solutions and POSCO in QPM, Definitive Feasibility Study progress at its Townsville Energy Chemicals Hub project, adequate cash balance, current trading levels, investors with a high-risk appetite might consider a ‘Speculative Buy’ position on the stock. The stock was analysed at the closing market price of $0.155. as of 21^st March 2022. However, the risk levels are high considering the project delays, continued losses, and impact on volatile metal prices. Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

QPM Daily Technical Chart, Data Source: REFINITIV 

Elmore Ltd (ASX: ELE)

ELE provides design, procurement, and construction management services of a magnetite processing plant. It currently manages the operations of the Peko Tailings Project which consists of Magnetite, Gold, Copper, and Cobalt located in the Northern Territory.

Financial and Operational Updates: ELE undertakes the management of the Peko Magnetite project throughout the half-year period ending December 31, 2021, for a fee that constitutes 25% of the profits. ELE has completed the stage 1 construction of the Peko Iron project. For this, ELE will be entitled to a 25% direct equity in two companies that was formed to house the Peko tailings magnetite and metals projects. Post completion of the installation of processing equipment, ELE aims to begin electrification and commissioning of its Peko Magnetite project by 2022. On December 6, 2021, ELE raised $3.0 million through private placement. Recently, it had issued notes to several large shareholders to raise $1.2 million. It had reported a net loss of $3.14 million in H1FY22 with over $1.41 million incurred towards operational expenses. This loss was compared to H1FY21 of $1.03 million. It had closed the period with a cash balance of $1.27 million.

Technical Analysis: ELE price broke the downward sloping trend line by upside and the prices are sustaining above the breakout level from the past one week. Also, there is a 21-period SMA golden crossover over 50-period SMA that further provides strength to the stock. RSI (14-period) is hovering at ~60.143 on a daily chart indicates the stock is trading in bullish momentum. Immediate support levels are AUD 0.028 and AUD 0.025, and immediate resistance levels are AUD 0.039 and AUD 0.046.

Considering the recent fund rise, completion of stage 1 construction at its Peko Iron project, and ongoing developments in the Peko Magnetite project, current trading levels, investors with a high-risk appetite might consider a ‘Speculative Buy’ position on the stock. The stock was analysed at the closing market price of $0.032 as of 22^nd March 2022. However, the risk levels are high considering the dearth of funding, widening of losses, and labour shortages. Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

ELE Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.